At this point in the year, I would have done several projects in the Bay Area and across the United States. I’m not trying to brag about it; the work is something I love to do and, in private – as my wife often hears, I sometimes gripe about the amount of work. But this quarter is different.
COVID-19 drastically changes the playing field. We’re dealing with reduced budgets and IT spend. The lasting effects will extend well throughout the remainder of the year, into 2021 and most likely 2022.
It’s a dim view and has you wondering, what now? There isn’t a day where I play out certain scenarios in my head. What if I lose my full-time job that has been very reliable? I could go full-time with my own business, but we have a pandemic wreaking havoc on the economy.
The strategy is now about staying alive, being creative in how you handle business, and displaying the value you bring to a prospective/existing client; who is also trying to make it out alive through the pandemic and post-pandemic.
It’s survival and recovery.
With COVID-19 forcing everyone to work from home, many companies put a hold on the work they had initially planned. Today, I still have projects waiting to be completed.
Before March, I knew there would be a significant impact on the bottom line. My travel would be limited and I had hoped remote work would maintain the same.
Net income decreased by -46.29% compared to Q1. Expenses were slightly higher in creating the negative number but mainly due to CPA and lawyer services I needed. In comparison to FY19Q2, net income was down -56.45%.
Professional services saw a -77.15% decrease compared to Q1. In comparison to FY19Q2, there was a -77.83% decrease. Travel and projects were placed on hold or scrapped.
Like many other businesses, there was a lot of business lost during Q2.
I don’t actively do any reselling of hardware so this category decreased the most at -93.39% compared to Q1 and -65.07% compared to FY19Q2. This wasn’t a shock to me since I don’t focus on hardware sales very much.
From my previous income report, I mentioned how I’ve grown to hate expenses. It takes away from the net income. In Q2, I continue my plan to reduce expenses. With the pandemic, it really forces you to look at your finances and spend wisely.
In Q2 there was a -61.12% change in expenses compared to Q1. In comparison to FY19Q2, there was a -56.99% change.
Forgoing any in-person conferences and travel really helped drive this down. But I did spend more on equipment for my lab.
That’s a big achievement! For two quarters in a row, expenses have decreased. Can I keep it up next quarter??
Important Lessons Learned
Remember when finance experts would tell you to have a rainy day fund? Turns out, most businesses don’t have this themselves. Over the last few months, we’ve seen news of businesses going bankrupt due to no sales.
Luckily, my operations are small and I’ve been wise with the money. But the pandemic shows how much we should put away for days like this. And if you have employees to take care of, you need a larger rainy day fund. Putting income away in savings is critical. If you haven’t read Profit First, then I highly recommend you pick up a copy and start implementing this new method.
During the pandemic, I’ve been able to relook at my business and see where I can trim some fat. It also allowed me to do experiments with video content. And with anything worth pursuing, planning is key. While there is no client work to be done, there was plenty of work to be done within the business.